Development of Building Technologies

Drives the Global Cladding Market

December 2017

Development of Building Technologies

Drives the Global Cladding Market

December 2017

The global cladding market size was estimated at USD807 billion in 2015 and is projected to grow at a CAGR of 2.6 percent from 2017 to 2025. Increasing construction spending and the development of more efficient building technologies using automated production & installation processes is expected to foster industry growth. Growing utilization of lightweight materials to foster energy savings in residences and offices is anticipated to boost industry growth over the forecast period. Novel applications are also being introduced for newly developed composite panels and other materials, which is expected to enhance the demand for fa ade panels.

Industry Insights

Wide availability of low cost raw materials such as steel, aluminum, plastics and others is also contributing to higher production levels, especially in emerging economies. Development of bio-based materials is expected to provide sustainable solutions over the near future. Consumers are also becoming increasingly aware of the benefits of lightweight, low cost solutions that protect building walls. New technologies such as dichromic window films are increasingly being used to provide UV protection to building interiors. Such materials reduce installation costs, maintenance & other hassles associated with conventional systems. Innovative materials such as the recently introduced recycled panels made entirely from 20,000 kgs of plastic waste, by Gampet Products, are expected to provide lucrative opportunities in niche applications such as architectural cladding. Other innovative ideas are also introducing new growth avenues for sustainable solution providers. Residential consumers are increasingly opting for vertical gardens on their exterior walls to create a sustainable, yet attractive look. This has led to the introduction of artificial 'green wall' panels that eliminate the need for watering or maintenance and provide a natural texture without compromising on structural integrity of walls. The market is likely to witness challenges in the form of high installation & maintenance costs. Perimeter sealant joints & flexible flashings require regular inspection and evaluation in case of extreme weather, which increases the risk of water & moisture retention & material failure. Additionally, advanced tools are required to access interior panel components that contain elements hidden inside the fa ade, which drives repair costs even higher.

Product insights

The fiber cement segment is expected to grow at over 5.6 percent CAGR, emerging as the fastest-growing product over the forecast period

Terracotta is likely to remain the dominant product with over 25 percent of volume share in 2016. The material is highly durable and fosters energy savings, by offering continuous insulation boosting the thermal performance of the building. These panels are also mortar-free and can be installed in extreme weather conditions at a low cost, which is expected to boost their growth. The fiber cement segment is expected to grow at over 5.6 percent CAGR, emerging as the fastest-growing product over the forecast period. This panel type is expected to exhibit higher growth rates over the forecast period owing to its durable mechanical properties with freeze thaw characteristics. Vinyl panels have conventionally been a reliable, low maintenance solution for waterproofing decks and outdoor living space. However, in the last few years, there has been a shift in trend towards wood plastic composites owing to enhanced properties. These panels are factory engineered panels and offer a high degree of stability, rigidity and excellent load-bearing capacity. Ceramic is inflammable and scratch resistant, which has fostered its demand in residential applications, as home-owners seek more sustainable and safe solutions. Other materials such as timber, weatherboard, glass-reinforcement fibers and stone/brick cladding are expected to remain important yet slow-growing segments. These materials are still utilized for conventional applications, despite their substitution with other lightweight and aesthetically appealing options. Ceramic cladding is extremely hygienic since it is easy to clean, resistant to external weather conditions and requires low maintenance.

Application insights

Residential applications accounted for 29.4 percent of overall volume share in 2016 and is expected to grow at a CAGR of 5.9 percent over the forecast period. Increasing investments to develop affordable housing schemes in emerging economies of Asia Pacific and Latin America is expected to drive growth in residential applications. A revitalized housing market in North America, with improvements in the U.S. housing sector in 2016 & housing starts up by about 10 percent y-o-y has contributed to demand in the region. Other emerging economies are also expected to drive growth in Asia Pacific, Latin America and other regions, owing to increased consumer spending and high infrastructural spending. Commercial applications are expected to grow at the second highest pace, owing to the proliferation of retail shopping, entertainment and recreational complexes in emerging nations such as India, China, Singapore, Thailand and Malaysia. These panels offer thermal insulation and aesthetic appeal to commercial buildings, meeting the growing demand for functional yet attractive malls and supermarts. Offices are expected to offer significant potential for investors, as rising employment rates, expansion of existing office spaces and strong demand for high quality conference centers drive consumption in office construction. Corporate headquarters for banks and other high profile companies require that buildings are built to high architectural and environmental standards. Investment 'value' remains the main criterion for choice of building materials.

Asia Pacific is anticipated to remain the fastest-growing region and account for nearly half of the global construction industry by 2020

Regional insights

Asia Pacific is anticipated to remain the fastest-growing region and account for nearly half of the global construction industry by 2020. Despite the deceleration in the Chinese economy, other emerging economies present ample investment opportunities for suppliers. Regional governments are ramping up efforts to encourage private participation in infrastructure development plans, which may drive sustainable building materials demand. Large economies in Southeast Asia are expected to grow at 5 percent in terms of GDP in 2017 as per World Bank estimates. A healthy spread of construction product supports the stability of the Asian markets, with government intervention boosting a majority of projects for infrastructure development. North America is expected to emerge as the next fastest-growing region with over 5 percent CAGR. Declining unemployment rates, growing popularity of pre-fabricated buildings, integration of building information modelling (BIM) technology and other trends are expected to shape industry dynamics, despite the complexities of skilled labor shortage. The construction industry in MEA is likely to benefit from growing government participation and increasing investments in sectors such as education, healthcare and infrastructure in order to diversify the country's economy & shift away from traditional oil activities to support economic growth.